Question

A monopoly has an inverse demand curve given by: p=28-Q

And a constant marginal cost of $4. Calculate deadweight loss if the monopoly charges the profit-maximizing price.

Round the number to two decimal places.

Answer 1

Q	P	TR	TC	Profit	MC	MR
0	28	0	0	0	4	28
2	26	52	8	44	4	24
4	24	96	16	80	4	20
6	22	132	24	108	4	16
8	20	160	32	128	4	12
10	18	180	40	140	4	8
12	16	192	48	144	4	4
14	14	196	56	140	4	0
16	12	192	64	128	4	-4
18	10	180	72	108	4	-8
20	8	160	80	80	4	-12
22	6	132	88	44	4	-16
24	4	96	96	0	4	-20
26	2	52	104	-52	4	-24
28	0	0	112	-112	4	-28

DWL = area of the triangle = 0.5*(24-12)*(16-4) = $72.00